1. Attracting and Retaining the Best Employees
PRIDE HUGHES KAPOOR
INTRODUCTION TO
BUSINESS
ELEVENTH EDITION
Chapter Eleven
Attracting and Retaining the Best Employees
11 | 1

2. Describe the major components of human resources management.
Learning Objectives
Describe the major components of human resources management.
Identify the steps in human resources planning.
Describe cultural diversity and understand some of the challenges and opportunities associated with it.
Explain the objectives and uses of job analysis.
11 | 2

3. Learning Objectives (cont’d)
Describe the processes of recruiting, employee selection, and orientation.
Discuss the primary elements of employee compensation and benefits.
Explain the purposes and techniques of employee training, development, and performance appraisal.
Outline the major legislation affecting human resources management.
11 | 3

4. Human Resources Management (HRM): An Overview
All the activities involved in acquiring, maintaining, and developing an organization’s human resources
HRM Activities
Human resources planning
Determining the firm’s human resource needs
Job analysis
Determining the exact nature of the positions
Recruiting
Attracting people to apply for positions
Selection
Choosing and hiring the most qualified applicants
Orientation
Acquainting new employees with the firm
11 | 4

5. Human Resources Management (HRM): An Overview (cont’d)
Maintaining
Employee relations
Increasing employee job satisfaction through satisfaction surveys, communication programs, exit interviews, and fair treatment
Compensation
Rewarding employee effort through monetary payments
Benefits
Providing rewards to ensure employee well-being
Development
Training and development
Teaching employees new skills, new jobs, and more effective ways of doing their present jobs
Performance appraisal
Assessing employees’ current and potential performance levels
11 | 5

6. Human Resources Management (HRM): An Overview (cont’d)
Responsibility for HRM
Shared responsibility of line managers and staff HRM specialists
Staff specialists develop specific HR activities (e.g., training and development) and deliver them with the assistance and input of line managers
11 | 6

7. Human Resources Planning
The development of strategies to meet a firm’s future human resources needs
Forecasting human resources demand
Factors affecting HR demand
The firm’s overall strategic plan
The firm’s past history of staffing levels
Evolving technologies
Industry staffing practices
Projected economic trends
HR staff determine both the number of employees needed and their qualifications
11 | 7

8. Human Resources Planning (cont’d)
Forecasting human resources supply
Factors affecting HR supply
The firm’s present workforce and any internal changes or movements
Supply forecasting techniques
Replacement chart
List of key personnel and their possible replacements within the firm
Skills inventory
Computerized data bank containing information on the skills and experience of all present employees
11 | 8

9. Human Resources Planning (cont’d)
Matching supply with demand
If demand is greater than supply, then the firm must recruit and select new employees
If supply is greater than demand, then the firm must prepare plans to reduce the workforce through
Layoffs: dismissing employees from the workforce until they are needed again
Attrition: normal reduction of the workforce that occurs when employees leave the firm
Early retirement: allowing or encouraging persons to retire early with full benefits
Firing may be necessary to remove excess employees from the workforce
11 | 9

10. Cultural Diversity in Human Resources
Differences among people in a workforce owing to race, ethnicity, and gender
Advantages of diversity
Cost savings from properly managing and integrating diversity into the company
Attracting the best personnel
Marketing advantages due to a better understanding of different cultural groups
Improved creativity
Increased organizational flexibility in the placement of personnel
Fresh viewpoints for problem solving and decision making
Bilingual skills bring numerous benefits to the organization
11 | 10

11. Cultural Diversity in Human Resources (cont’d)
Coping with diversity challenges
Train and educate managers to respect and manage diversity
Recruit minority employees and train them to be managers
Train managers to view diversity positively
Teach English as a second language
Facilitate support groups for immigrants
Have a strong commitment from upper management to diversity goals for the organization
11 | 11

12. Job Analysis
A systematic procedure for studying jobs to determine their various elements and requirements
Job description
A list of the elements that make up a particular job
Duties to be performed, working conditions, the jobholder’s responsibilities, the tools and equipment used on the job
Job specification
A list of the qualifications required to perform a particular job
Skills, abilities, education, and experience
Used for recruiting, selecting, evaluation, and compensation decisions
11 | 12

13. Job Description and Job Specification
Figure 11.1
11 | 13

14. Recruiting, Selection, and Orientation
The process of attracting qualified job applicants
Goal is to attract the “right” number of applicants
External recruiting
Sources
Websites, newspaper ads, employment agencies, college campuses, employee referrals, open houses, walk-in applicants
Advantages
Fresh perspectives and varied backgrounds of new hires
Attracting applicants with the required skills and knowledge
Disadvantages
Expense
May cause resentment among existing employees
11 | 14

15. Recruiting, Selection, and Orientation (cont’d)
Internal recruiting
Promotion or transfer
Job posting may be required by policy or union contract
Advantages
Provides motivation for current employees
Helps retain quality personnel
Disadvantages
Cost of filling the newly vacant position
Cost of training another employee
11 | 15

16. When Should a Job Candidate Ask About Salary?
Source: Accountemps survey of 150 senior executives; USA Today, April 13, 2009, p. 1B.
11 | 16

17. Recruiting, Selection, and Orientation (cont’d)
The process of gathering information about applicants and then using that information to choose the most appropriate applicant
Employment applications
Provide useful factual information about the applicant
Information gathered is used for
Identifying applicants worthy of further scrutiny
Familiarizing interviewers with applicant backgrounds
Often include résumés
11 | 17

18. Typical Employment Application
Source: Courtesy of 3M.
11 | 18

19. Typical Employment Application (cont’d)
Source: Courtesy of 3M.
11 | 19

20. Recruiting, Selection, and Orientation (cont’d)
Selection (cont’d)
Employment tests
Focus on aptitude, skills, abilities, and knowledge relevant to the job
For a test to be nondiscriminatory, it must be job-related and validated as an accurate predictor of job performance
Interviews
The most widely used selection technique
Opportunity for applicants and the firm to learn more about each other
For interviews to be nondiscriminatory, a structured interview format is recommended
11 | 20

21. Interview Questions That May Be Difficult to Answer
Table 11.2
Sources: Adapted from Susan D. Greene and Melanie C. L. Martel, The Ultimate Job Hunter’s Guidebook, 5th ed. Copyright © 2008 by Houghton Mifflin Company, pp. 196–197. Used with permission.
11 | 21

22. Recruiting, Selection, and Orientation (cont’d)
Selection (cont’d)
References
Used to verify information furnished by the applicant about previous job responsibilities and the reason for leaving their previous job
Assessment centers
Used to select current employees for promotion to higher-level management positions
Employees participate in simulated management activities and are observed and evaluated by other senior managers
11 | 22

23. Recruiting, Selection, and Orientation (cont’d)
The process of acquainting new employees with an organization
May be brief and informal or long and formal
Topics
Range from location of company cafeteria to career paths within the firm
11 | 23

24. Compensation and Benefits
Effective employee reward systems must
Enable employees to satisfy their basic needs
Provide rewards comparable to those offered by other firms
Be distributed fairly in the organization
Recognize that different people have different needs
11 | 24

25. Compensation Decisions
The payment employees receive in return for their labor
Compensation system
The policies and strategies that determine employee compensation
Wage level
The firm’s choice to position its general level of pay at, above, or below the market (prevailing wage) for an industry or a geographic area
Wage survey—a collection of data on prevailing wage rates within an industry or geographic area
11 | 25

26. Compensation Decisions (cont’d)
Wage structure
The internal compensation structure that sets the relative pay levels for all the positions in the firm
Job evaluation—the process of determining the relative worth of the various jobs within a firm
Ranking jobs according to their value to the firm
Job analysis using a point system to value jobs
Individual wages
Decisions on specific wage payments to individual employees are based on
The wage range for the job
The individual’s proficiency, experience, and performance
11 | 26

27. Compensation Decisions (cont’d)
Comparable worth
A concept that seeks equal compensation for jobs requiring about the same level of education, training, and skills
11 | 27

28. Types of Compensation Hourly wage Salary Commission Incentive payment
A specific amount of money paid for each hour of work
Salary
A specific amount of money paid for an employee’s work during a set calendar period, regardless of the number of hours worked
Commission
A payments that is a percentage of sales revenue
Incentive payment
A payment in addition to wages, salary, or commissions such as gain sharing for exceeding goals or quotas
Lump-sum salary increase
An entire pay raise taken in one time in one lump sum
Profit sharing
The distribution of a percentage of a firm’s profit among its employees
11 | 28

29. Employee Benefits
Rewards in addition to regular compensation that are provided indirectly to the employee
Types of benefits
Pay for time not worked
Vacation time, holidays, and sick leave
Insurance packages
Health, life, and dental insurance
Pension and Retirement programs
Costs may be shared or fully paid by the employer
Required by law
Workers’ compensation, unemployment insurance, and Social Security
Other benefits
Tuition-reimbursement, credit unions, child care, company cafeterias, exercise rooms, stock-options, special benefits to U.S. military reservists called to active duty
11 | 29

30. Employee Benefits (cont’d)
Flexible benefits plan
Compensation plan whereby an employee receives a predetermined amount of benefit dollars to spend on a package of benefits he or she has selected to meet individual needs
Administration cost is high but deemed justified
More specifically meet employees’ needs
Help company contain costs in the long run
Company is perceived to be employee friendly thereby being in a better position to attract and retain qualified employees
11 | 30

31. Training and Development
Employee training
The process of teaching operations and technical employees how to do their present jobs more effectively and efficiently
Management development
The process of preparing managers and other professionals to assume increased responsibility in both present and future positions
Development of a training program
Analysis of the needs
Determination of training and development methods
Creation of evaluation system to assess the program’s effectiveness
11 | 31

32. Analysis of Training Needs
Is training needed?
What types of training are needed?
Improve technical skills
Focus on organizational procedures, business ethics, product information, customer service
Is motivation needed?
Training is expensive; be sure it is appropriate
11 | 32

33. Training and Development Methods
On-the-job
New employee learns by working under the supervision of experienced employee
Simulation
Training in an area that replicates the actual work environment without the day-to-day pressures
Classroom teaching and lectures
For large groups who need the same information (e.g., notification of change in benefits)
Conferences and seminars
Experts and learners meet to discuss problems and exchange ideas
Role playing
Acting out the roles of others in the organization for a better understanding of those roles
11 | 33

34. Evaluation of Training and Development
Before training, develop a set of verifiable objectives that specify what is expected and how the results are to be measured
Measure or verify training results
Make the results known to all those involved in the program—including trainees and upper management
11 | 34

35. Performance Appraisal
The evaluation of employee’s current and potential levels of performance to allow managers to make objective human resource decisions
Uses of performance appraisal
Let workers know how they are doing and how they can do better
Provide the basis for distributing rewards
Help the organization monitor employee selection, training, and development activities
11 | 35

36. Common Evaluation Techniques
Objective methods
Their basis is a measurable quantity (e.g., units of output, sales volume, number of defective products).
Judgmental methods
Managerial estimates of employee performance levels
Ranking
Ordering employees from best to worst
Difficult to use because there is no absolute standard
Rating
Using a predetermined scale (standard) to evaluate each employee’s performance
11 | 36

37. Performance Appraisal
Source: Courtesy of 3M.
11 | 37

38. Performance Appraisal (cont’d)
Source: Courtesy of 3M.
11 | 38

39. Common Evaluation Techniques (cont’d)
Avoiding appraisal errors
Use the entire evaluation instrument; avoid focusing on one portion
Do not let an employee’s poor performance in one area influence the evaluation of other areas of performance
Evaluate the entire performance period and not the most recent behaviors of the employee
Guard against any form of personal bias or discrimination in the evaluation
11 | 39

40. Performance appraisal information should be provided to employees
Performance Feedback
Performance appraisal information should be provided to employees
Approaches to performance feedback
Tell-and-sell
Superior tells the employee how well or poorly the employee is performing and attempts to persuade the employee to accept the evaluation
Supervisor tells the employee about his or her performance and then gives the employee a chance to respond
Problem-solving approach
Employee evaluates own performance and sets own goals; supervisor offers comments and goals are mutually established
11 | 40

41. Performance Feedback (cont’d)
Approaches to performance feedback (cont’d)
Mixed interview
Tell-and-sell to communicate administrative decisions
Problem-solving to discuss employee-development issues and future goals
360-degree evaluation
Employee is provided feedback from evaluations by his superiors, peers, and subordinates
11 | 41

42. The Legal Environment of HRM
National Labor Relations Act and Labor-Management Relations Act (1935)
Established a collective-bargaining process in labor-management relations as well as the National Labor Relations Board (NLRB)
Fair Labor Standards Act (1938)
Established a minimum wage and an overtime pay rate for employees working more than forty hours per week
Many managers and other professionals are exempt
Labor-Management Relations Act (1947)
Provides a balance between union power and management power; also known as the Taft-Hartley Act
Equal Pay Act (1963)
Specifies that men and women who do equal jobs must be paid the same wage
Differences are legal if they are attributed to seniority, qualifications, or performance
11 | 42

43. The Legal Environment of HRM (cont’d)
Title VII of the Civil Right Act (1964)
Prohibits discrimination in employment practices based on sex, race, color, religion, or national origin
Enforced by the Equal Employment Opportunity Commission (EEOC)
Age Discrimination in Employment Act ( )
Prohibits personnel practices that discriminates against people aged 40 and older
Eliminated mandatory retirement age
Occupational Safety and Health Act (1970)
Regulates the degree to which employees can be exposed to hazardous substances and specifies the safety equipment that the employer must provide
Enforced by the Occupational Safety and Health Administration (OSHA)
Employment Retirement Income Security Act (1974)
Regulates company retirement programs and provides a federal insurance program for retirement plans that go bankrupt
11 | 43

44. The Legal Environment of HRM (cont’d)
Employment Retirement Income Security Act (1974)
Regulates company retirement programs and provides a federal insurance program for retirement plans that go bankrupt
Worker Adjustment and Retraining Notification (WARN) Act (1988)
Requires employers to give employees sixty days notice regarding plant closure or layoff of fifty or more employees
Americans with Disabilities Act (1990)
Prohibits discrimination against qualified individuals with disabilities in all employment practices
Reasonable accommodation
Required by employers to provide any modification or adjustment to a job or work environment to enable a qualified, disabled employee to perform a central job function
Civil Rights Act (1991)
Facilitates employees’ suing employers for sexual discrimination and collecting punitive damages
11 | 44

45. The Legal Environment of HRM (cont’d)
Family and Medical Leave Act (1993)
Requires an organization with fifty or more employees to provide up to twelve weeks of leave without pay for serious family business such as births, adoptions, illness
Affordable Care Act (2010)
Requires an organization with fifty or more employees to make health insurance available to employees or pay an assessment, gives employees the right to buy health insurance from another provider
11 | 45

46. The Legal Environment of HRM (cont’d)
Affirmative Action (a series of executive orders)
Applies to all employers with fifty or more employees holding federal contracts in excess of $50,000
Such employers must
actively encourage job applications from members of minority groups
hire qualified employees from minority groups not fully represented in the organization
11 | 46